as retail’s new front door - pymnts.com · only 3.5 percent of all main street businesses and 16...

A PYMNTS AND VISA COLLABORATION

For the Marketplaces As Retail’s Front Door: What Sellers

Need To Thrive In This New Digital World study, PYMNTS and

Visa surveyed 1,049 businesses and individuals from across

the United States selling on digital marketplaces to better

understand how each uses online marketplaces, the types

of products they list on those marketplaces and how they

receive payouts for the sales they generate. We also sought

to understand how digital payout features like credit options

and real-time settlement capabilities can keep them from

shifting their products to competing marketplaces. AUGUST 2020

What Sellers Need To Thrive In This New Digital World

MARKETPLACES AS RETAIL’S

NEW FRONT DOOR

TABLE OF

CONTENTS

ACKNOWLEDGMENT

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . 02

Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . 05

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Marketplaces As Retail’s New Front Door: What Sellers Need To Thrive In This New Digital World was done in collaboration with Visa, and PYMNTS is grateful for the company's support and insight. PYMNTS.com retains full editorial control over the following findings, methodology and data analysis.

http://www.pymnts.com

04 03

© 2020 PYMNTS.com All Rights Reserved

Digital marketplaces are a beneficial yet underutilized tool for Main Street busi-

nesses and for individuals using web sales to supplement their personal incomes.

These small and mid-sized operations and casual sellers tend to lack the resources

to invest heavily in enhancing their IT infrastructure. Digital marketplaces, which

enable them to list products and accept payments with little expenditure, can

therefore provide a cost-effective alternative to building payment operations from

the ground up. Only 3.5 percent of all Main Street businesses and 16 percent of

all adult United States residents and microbusinesses report using digital mar-

ketplaces, however, underscoring a considerable opportunity for growth. The only

question is how marketplaces can draw these sellers to their platforms.3

C ollectors and pack rats rejoiced when eBay launched in 1995, granting

buyers with a passion for picking up one-of-a-kind items and sellers

cleaning out their attics and garages a chance to connect online and do

business together for the first time. eBay allowed sellers to monetize the

stuff they no longer wanted and enabled buyers to find unique treasures from any-

one, anywhere. A few hitches existed, though, foremost how sellers should collect

their payouts.

This friction has been present on digital marketplaces1 from eBay to Etsy and

beyond since their inception but has become even more pronounced since March,

when individuals, brands and stores with physical footprints began turning to dig-

ital commerce channels to find customers and make sales in the face of the

pandemic. PYMNTS’ research suggests that 72 percent of surveyed Main Street

businesses — those generating less than $10 million in annual revenue — that

maintain brick-and-mortar locations in commercial areas have improved upon

their digital capabilities or added new capabilities since the pandemic began.2

3 Our survey respondents qualified as a representative of a business if they were either owners or workers for a store or business generating less than $10 million in annual revenue which sells products online and who has intimate knowledge and leadership responsibilities in areas related to their firms’ use of marketplaces.

1 Our survey defines “digital marketplaces” as online platforms where third party sellers are able to list either new or used products for sale. Examples of mar-ketplaces considered in our study include not only resale marketplaces such as eBay and Craigslist but also Amazon, Walmart, Poshmark, Wayfair and Mercari, to name a few.

2 Main street on lockdown: Business recovery edition. PYMNTS.com 2020. https://www.pymnts.com/coronavirus-data-center/. Accessed August 2020.

16%DIGITAL MARKETPLACES

Sixteen percent of all adult U.S. residents and micro businesses list on digital marketplaces.

72%MAIN STREET BUSINESSES

Seventy-two percent of Main Street businesses in the U.S. have improved upon or added new digital capabilities since the pandemic began.

INTRODUCTION

https://www.pymnts.com/coronavirus-data-center/

06 05


Waiting a few days to receive sales proceeds might not have seemed as if it were

make-or-break for sellers in the past. The expectation that sales proceeds may not

be made available for several days was common and even accepted as a standard

business practice in stronger economic times. Those days can now mean the dif-

ference between paying bills and making payroll for the six in 10 businesses and

eight in 10 individuals and microbusinesses in our study who are turning to market-

places to find customers and make sales during the current economic crisis.

The efficiency of the listing experience is important for many surveyed sellers

but not as important as being paid in real time.

60% 62%

BUSINESSES

Sixty percent of all surveyed businesses are “somewhat” to “extremely” interested in switching to marketplaces that offer real-time settlement options.

INDIVIDUALS AND MICROBUSINESSES

Sixty-two percent of surveyed individual marketplace sellers are “somewhat” to “extremely” interested in switching to marketplaces that offer real-time settlement options.

PYMNTS, in collaboration with Visa,

surveyed 1,049 individual and business

marketplace sellers from across the

U.S. to better understand how each

uses online marketplaces, the types

of products they list on those market-

places and how they receive payouts

for the sales they generate. We also

sought to understand how digital pay-

out features like credit options and

real-time settlement capabilities can

keep them from taking their products

to a competing marketplace.

We found that businesses in our sur-

vey that sell via online marketplaces

wait an average of 3.3 days before they

receive sales proceeds in their bank

accounts, and 27 percent of those

businesses report waits of between

three to five days.

Respondents were classified into five different groups depending on size, in the case of businesses, and product types, in the case of individuals and microbusinesses. The final groups were:

INDIVIDUALS:

individual sellers that only sell used products on marketplaces

MICRO- BUSINESSES:

individual sellers that sell new products on marketplaces

SMALL BUSINESSES:

businesses with revenues of less than $500K

MID-SIZED BUSINESSES:

businesses with revenues between $500K and $1M

LARGE BUSINESSES:

businesses with revenues of $1M or more

08 07


The implications are clear: Real-time

settlement is a capability that is so

prized that many surveyed sellers

might be willing to move their busi-

nesses to platforms that can deliver

it. This finding is a call to action for

marketplaces — there are no buyers

to generate sales without sellers that

offer great products, after all.

PYMNTS’ research shows that three-quarters of surveyed Main Street busi-

nesses have experienced cash flow shortages during the five months since

the pandemic’s onset. This compares to 56 percent of SMBs in a 2019 study

that had reported experiencing cash flow shortages.4 Even more critical is

the fact that 37 percent of Main Street businesses that are experiencing

issues with their cash flows during the pandemic also report having to dip

into their personal funds just to keep their businesses afloat.5 Another 23

percent report having to resort to borrowing money from family and friends,

underscoring just how valuable it can be for them to quickly receive sales

proceeds.

The SMBs we have studied have few credit options available to bridge their

cash flow crunches, however, and they now regard getting paid more quickly

after sales are made as an essential service from virtual storefronts. One-

third of all surveyed businesses and individuals selling on marketplaces

would consider switching marketplaces for access to real-time settlement

options that can help them get the funds they need.

37%

23%

PERSONAL FUNDS

Thirty-seven percent of Main Street business owners in the U.S. who have experienced cash flow shortages have had to dip into their personal funds to keep their businesses afloat.

BORROWING FROM FRIENDS AND RELATIVES

Twenty-three percent of Main Street business owners in the U.S. who have experienced cash flow shortages have had to borrow money from friends and relatives to stay afloat.

4 SMB receivables cap. PYMNTS.com. 2019. https://www.pymnts.com/study/the-smb-receivables-gap-playbook-november-2019/. Accessed August 2020.

5 The road to recovery: Main street SMBs and closing the cash flow gap. PYMNTS.com. 2020. https://www.pymnts.com/the-road-to-recovery/. Accessed August 2020.

Case studies, comparisons, statistics, research and recommendations are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. Visa neither makes any warranty or representation as to the completeness or accuracy of the information within this document nor assumes any liability or responsibility that may result from reliance on such information. The information contained herein is not intended as investment or legal advice, and readers are encouraged to seek the advice of a competent professional where such advice is required.

Businesses and individuals are turning to digital commerce channels to

boost their sales and supplement their income

amid the economic downturn.

https://www.pymnts.com/study/the-smb-receivables-gap-playbook-november-2019/

https://www.pymnts.com/the-road-to-recovery/

10


MARKETPLACES ARE THE NEW MALLS.

Sellers set up their virtual storefronts on them to find customers; buyers gather there to find things to buy.

S ellers are often primarily

drawn to digital market-

places for their accessibility,

both in terms of reach and

ease of use. The single biggest reason

surveyed businesses and individuals

sell on marketplaces is to reach more

potential buyers. Our research shows

that 62 percent of the businesses in

our study that use marketplaces do

so to reach more customers and that

78 percent of surveyed individuals

and microbusinesses in our study use

marketplaces for the same reason.

Many surveyed businesses and indi-

viduals also list on marketplaces for

their ease of use. Twenty-one per-

cent of businesses in our study sell on

marketplaces because they believe it

is a quick and easy way to expand and

access new sales, for example, and 12

percent use them because they make

it easy to collect payouts. Sixteen

percent of surveyed individuals and

microbusinesses report using market-

places to easily receive payouts.

FIGURE 1:

Why surveyed businesses, microbusinesses and indi-viduals use online marketplaces Share that use digital marketplaces for select reasons, businesses versus individuals

77.7%61.5%

4.8%1.9%

0.0%21.2%

0.0%3.8%

15.6%11.5%

1.9%0.0%

0000000000

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0000000000

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0000000000

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0000000000

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Access to more customers

Low chance of fraud

Quick and easy way to expand and access new channels

Way to reach customers internationally

individuals and microbusinesses

Businesses

Easy to collect payouts

Others

Source: PYMNTS.com

12 11


The majority of businesses with digital marketplace listings use them to complement their brick-and-mortar sales.

Slow settlement speeds have the greatest impact on a minority of businesses for which marketplace sales are their only source of revenue.

65.4%

36.5%

26.9%

0000000000

0000000000

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For additional distribution of products

For selling products directly to customers in addition to stores

For using as a storefront without a physical store

FIGURE 2:

The degree to which surveyed businesses rely on online marketplaces to generate sales Share that use marketplaces as a primary or complementary source of revenue

Source: PYMNTS.com

Not all businesses in our study rely

on marketplaces to the same extent,

however. Most surveyed businesses

that sell on marketplaces do so to

complement their physical store sales,

but a minority of them lack brick-and-

mortar stores and are totally reliant on

marketplaces as a source of revenue.

Our research indicates that 65 percent

of surveyed businesses use market-

places to complement their physical

storefronts, while 27 percent use mar-

ketplaces as their only storefronts. All

marketplace sellers stand to bene-

fit from expedient payouts, but quick

and easy funds access is even more

crucial for the 27 percent of surveyed

sellers that use digital marketplaces

as their only storefront.

65%

27%

SECONDARY REVENUE SOURCE

Sixty-five percent of businesses that sell on marketplaces use marketplace sales to complement their brick-and-mortar sales.

PRIMARY REVENUE SOURCE

Twenty-seven percent of business sellers have no physical store and rely on marketplaces as their only source of revenue.

14 13


Sellers list their products on marketplaces

THAT WILL APPEAL TO MORE OF THEIR TARGET BUYERS.

M arketplaces attract a

variety of businesses,

microbusinesses and

individuals offering a

broad assortment of products, both

used and new, but certain types of

products tend to be listed more fre-

quently than others. Businesses that

sell on marketplaces are more likely

to sell retail goods and groceries than

any other type of product. Our research

shows that 33 percent of surveyed

businesses selling on marketplaces

sell new clothes and accessories, 31

percent sell food or grocery products

and 23 percent sell new electronics

and appliances.

32.7%

21.2%

23.1%

13.5%

9.6%

30.8%

19.2%

23.1%

11.5%

5.8%

23.1%

17.3%

21.2%

11.5%

17.3%

0000000000

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Clothing and accessories

Sporting goods

Home furnishings

Building materials

Personal resale products

Grocery products

Arts and crafts

Office supplies

Garden supplies

Antiques

Electronics and appliances

Music and hobby products

Books

Auto parts

Other

FIGURE 3:

Types of products surveyed businesses sell on online marketplaces Share that sell select types of products via marketplaces

Source: PYMNTS.com

Groceries

Thirty-one percent of businesses selling on marketplaces list grocery products.

16 15


Our study identifies two distinct types of individual sellers who use marketplaces

in addition to business sellers. The first are individuals in our survey who use mar-

ketplaces for personal rather than professional purposes. These sellers usually sell

no new products of any kind, instead selling used items that they no longer want.

Fifty-two percent of these surveyed individuals list clothing and accessories, for

example, while 32 percent list clothing their children have outgrown.

The second type of individual seller

in our survey are microbusinesses.6

These microbusinesses almost exclu-

sively sell homemade arts and crafts

and often sell used items to comple-

ment their sales. Fifty-one percent of

surveyed microbusinesses sell used

shoes and accessories, and 40 per-

cent sell electronics they no longer

use in addition to homemade arts and

crafts. This goes to show that it is not

just businesses that rely on market-

places to generate revenue: They are

also a supplemental source of income

for many of the individuals and micro-

businesses in our study. This is growing

in importance given the current eco-

nomic climate, in which 10 percent of

the nonfarm adult working popula-

tion population was unemployed as of

July.7

57.4%

17.4%

42.2%

56.1%

2.5%

30.9%

49.7%

3.9%

28.1%

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0000000000

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0000000000

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Unwanted physical goods

Self-made arts and crafts products

Unused eletronics

Unused physical goods

Antiques or collectibles

Outgrown children’s apparel

Unwanted clothes, shoes and accessories

Other

Outgrown children’s toys and games

FIGURE 4:

Which products surveyed individuals and microbusinesses list on marketplaces Share who sell select types of goods on marketplaces

Source: PYMNTS.com

FIGURE 5:

Which products individuals and microbusinesses sell on marketplaces Share who sell select items on marketplaces, individuals versus microbusinesses

61.4%53.5%

45.1%39.5%

1.1%0.0%

61.1%45.4%

32.1%32.8%

1.9%3.8%

52.1%51.1%

0.0%100.0%

28.3%34.2%

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

Unwanted physical goods

Unused eletronics

Antiques or collectibles

Unused physical goods

Outgrown children’s apparel

Other

Individuals

Microbusinesses

Clothes, shoes and accessories

Self-made arts and crafts products

Outgrown children’s toys and games

Source: PYMNTS.com

57%INDIVIDUALS AND MICROBUSINESSES

Fifty-seven percent of individuals and microbusinesses selling on marketplaces list physical goods they no longer want.

6 Our analysis defines “microbusinesses” as businesses that are owned and operated by a single person whose revenues result from selling at least some prod-ucts the person makes, such as clothing, accessories or arts and crafts.

7 Employment situation news release. The Bureau of Labor Statistics. 2020. https://www.bls.gov/news.release/archives/empsit_08072020.htm. Accessed August 2020.

https://www.bls.gov/news.release/archives/empsit_08072020.htm

18 17


Source: PYMNTS.com

3.0

4.0

1.0

2.0

FIGURE 6:

How long surveyed sellers wait to receive sales proceeds in their bank accounts Average number of days sellers wait to receive sales proceeds in their bank accounts, by size and type

Mid-sized businesses (earning $500K-$1M)

Large businesses (earning more than $1M)

Small businesses (earning less than $500K)

Microbusinesses Individuals All businesses Individuals and microbusinesses

3.0

3.5 3.4

2.7

0.8

2.5

0.5

3.3

2.5

0.6

Paid by marketplaces

Paid by customers

THE AVERAGE BUSINESS SELLER WAITS JUST OVER THREE DAYS FOR FUNDS TO SETTLE.

Individuals and microbusinesses wait just over two days, on average.

M any of the businesses

and individuals in our

study rely on market-

places to stay afloat, but

promptly receiving the sales proceeds

they generate on those marketplaces

is an ongoing challenge. The degree to

which surveyed sellers must deal with

this problem varies depending on the

type of seller in question, however.

Businesses in our study wait longer

than surveyed individuals and micro-

businesses to receive payouts, and the

largest businesses are paid the slowest

of all. Our survey shows that surveyed

large businesses wait an average of 3.5

days before receiving sales proceeds in

their bank accounts. This is only slightly

longer than the average of 3.4 days it

takes for surveyed small businesses to

be paid. Mid-sized businesses in our

study are paid the fastest, waiting an

average of three days before receiving

sales proceeds.

Surveyed individuals selling on mar-

ketplaces get paid faster than all

others because buyers often pay them

directly in cash. The average surveyed

individual selling via a marketplace

waits just 0.6 days to be paid directly

from a buyer and waits an average of

2.5 days when paid through the mar-

ketplace. Surveyed microbusinesses

are also paid faster than most other

businesses that sell on marketplaces,

receiving sales proceeds in their bank

accounts in just 0.8 days when paid by

buyers directly and in 2.7 days if they

are paid via marketplace.

20 19


MOST BUSINESS SELLERS ARE PAID BY THEIR MARKETPLACES.

Most individual marketplace sellers are paid directly by buyers.

I t is necessary to examine how

marketplace sellers of different

sizes and types receive proceeds

to understand why they must

often wait several days and why some

are paid faster than others. Eighty-

eight percent of surveyed businesses

selling on marketplaces are paid

through the marketplaces on which

they display their listings, while the

remaining 12 percent are paid directly

by buyers. They are most often paid

via automated clearing house (ACH) or

debit card, both cited by 33 percent

of these businesses, followed by digi-

tal wallet and check, which were both

cited by 17 percent of such respon-

dents.

Businesses of certain sizes are more

prone than others to be paid via mar-

ketplaces, while others are more likely

to be paid directly by buyers. The

SMBs in our study are the most likely

of all to be paid via marketplaces, with

86 percent of small businesses and

100 percent of mid-sized businesses

receiving payouts via marketplaces,

respectively.8

8 Our study defines “large businesses” as those generating more than $1 million in annual revenue, “mid-sized businesses” as those generating between $500,000 and $1 million in annual revenue and “small businesses” as those generating less than $500,000 in annual revenue. We use the term small to mid-sized busi-nesses (SMBs) to collectively refer to the latter two size classes.

88%BUSINESSES

Eighty-eight percent of all businesses selling on marketplaces receive payouts through their marketplaces.

22 21


Share of surveyed businesses and individuals who receive payouts directly from buyers or are paid via marketplaces, by size

75.0%25.0%

39.7%60.3%

100.0%0.0%

34.4%65.6%

88.5%11.5%

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

Large businesses

Microbusinesses

Mid-sized businesses

Individuals

Collected through marketplace, then paid to seller

Collected directly from the buyer

Small businesses

Source: PYMNTS.com

FIGURE 8:

How surveyed sellers are paid when receiving payouts via marketplaces Share of surveyed businesses and individuals and microbusinesses that receive payouts using select methods

49.4%17.4%

3.0%17.4%

26.6%32.6%

1.2%0.0%

19.7%32.6%

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

Digital wallet

Check

Bank account via ACH

Other

Individuals and microbusinesses

Businesses

Debit cards

Source: PYMNTS.com

The SMBs in our study that are paid

via marketplaces tend to receive their

sales proceeds using payout methods

that can take several days to fully

process. Mid-sized businesses paid

through marketplaces are most com-

monly paid via debit card and ACH,

for example, with 43 percent and 36

percent being paid in these ways,

respectively. Surveyed small busi-

nesses paid via marketplaces are also

likely to be paid via ACH, with 35 per-

cent reporting receiving payouts this

way. The second- and third-most

common ways in which these small

businesses receive payouts are via

digital wallet and debit card, with 26

percent being paid via one of these

two methods.

FIGURE 7:

How surveyed businesses, microbusinesses and individuals are paid for sales proceeds Share of businesses, microbusinesses and individuals who receive payouts directly from buyers or are paid via marketplaces

35.2%64.8%

88.5%11.5%

0000000000

0000000000

0000000000

0000000000


Businesses

Collected through marketplace, then paid to seller

Collected directly from the buyer

Source: PYMNTS.com

Many large businesses selling on dig-

ital marketplaces often have a very

different payout experience. Large

businesses in our study are the least

likely of all size classes to be paid

through the marketplaces they use,

with 75 percent receiving payouts in

this way. Among those large busi-

nesses, most receive payouts via

check or debit card: 44 percent are

paid via check and 33 percent are paid

via debit card.

TABLE 1:

How surveyed sellers are paid when receiving payouts via marketplaces Share of businesses and individuals that receive payouts using select methods, by size

41.8%

31.1%

23.0%

4.1%

0.0%

14.3%

35.7%

42.9%

7.1%

0.0%

26.1%

34.8%

26.1%

13.0%

0.0%

0.0%

22.2%

33.3%

44.4%

0.0%

50.1%

25.6%

19.9%

2.9%

1.5%

• Digital wallet

• Bank account via ACH

• Debit cards

• Check

• Other

Source: PYMNTS.com

BUSINESS SIZE

Small businesses

Large businesses

IndividualsMicrobusinessesMid-sized businesses

Paper checks

Seventeen percent of businesses that receive payouts via marketplace

are paid by check.

24 23


The marketplace experience of indi-

viduals and microbusinesses is often

even more different. Most individuals

and microbusinesses in our survey

are paid directly by buyers, and only

a minority are paid via marketplaces.

Our research shows that 65 percent

of individuals and microbusinesses on

marketplaces are paid directly by buy-

ers and that 35 percent are paid via

marketplaces.

Individuals and microbusinesses in

our study do not often receive pay-

outs in the same ways as other

businesses. The biggest difference

is that 57 percent of surveyed indi-

viduals and microbusinesses that

are paid directly by buyers are paid

in cash, while not a single surveyed

business that sells is paid in cash.

These cash payouts may be either

sent via mail or exchanged in per-

son after purchases are made online.

Almost one-quarter of surveyed indi-

viduals selling on marketplaces also

report being paid via digital wallets.

The ways in which surveyed micro-

businesses are paid are more similar

to the payouts that individuals sell-

ing on marketplaces receive than they

are to business sellers’ payouts. Sixty

percent of surveyed microbusinesses

listing on marketplaces are paid

directly by buyers, whereas 51 percent

of this group receive cash payouts and

26 percent of this group are paid via

digital wallet.

TABLE 2:

How sellers are paid when paid by buyers directly Share of businesses, microbusinesses and individuals who receive payouts using select methods, by size

51.2%

26.2%

4.3%

10.4%

4.5%

3.3%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

33.3%

0.0%

33.3%

33.3%

0.0%

0.0%

0.0%

0.0%

66.7%

0.0%

33.3%

59.1%

23.2%

6.1%

4.2%

5.5%

1.2%

• Cash

• Digital wallet

• Direct deposit

• Credit cards

• Debit cards

• Check

Source: PYMNTS.com

BUSINESS SIZE

Small businesses

Large businesses

IndividualsMicrobusinessesMid-sized businesses

FIGURE 9:

How sellers are paid when paid by buyers directly Share of businesses, microbusinesses and individuals that receive payouts using select methods

57.2%0.0%

5.5%50.0%

24.0%16.7%

5.4%16.7%

5.7%0.0%

1.5%16.7%

0000000000

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0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

Cash

Credit cards

Digital wallet

Debit cards


Businesses

Direct deposit

Check

Source: PYMNTS.com

60%MICROBUSINESSES

Sixty percent of microbusinesses selling on marketplace receive payouts directly from buyers.

Digital wallets

Twenty-four percent of individuals and microbusinesses that receive payouts directly from buyers are paid via digital wallet.

26 25


MARKETPLACE SELLERS HAVE MANY OPTIONS FOR LISTING THEIR PRODUCTS.

Marketplaces that do not offer real-time payouts risk losing their sales.

L arge business sellers in our

survey, which often wait the

longest to get paid, are also

the most interested in real-

time settlement. Our research shows

that 71 percent of surveyed large busi-

nesses are “somewhat” to “extremely”

interested in real-time settlement.

Fewer of the SMB marketplace sellers

in our study express this level of inter-

est, but the share that do so is still

significant. Fifty-five percent of the

mid-sized businesses in our study are

“somewhat” to “extremely” interested

in real-time settlement, for example,

as are 52 percent of surveyed small

businesses.

Interest in real-time settlement is not

limited to business sellers, either. Our

study finds that 67 percent of sur-

veyed individuals and 68 percent of

surveyed microbusinesses are “some-

what” to “extremely” interested in

real-time settlement options. This sig-

nals an underlying interest in moving

away from cash among both individ-

uals and microbusinesses who use

digital marketplaces.TABLE 3:

Surveyed sellers’ interest in using real-time settlement Share that express select levels of interest, by size and type

23.1%

0.0%

36.4%

23.8%

21.3%

18.8%

19.3%

17.9%

14.3%

18.2%

19.0%

23.6%

23.7%

23.5%

23.1%

28.6%

27.3%

19.0%

28.2%

29.7%

29.6%

15.4%

28.6%

9.1%

14.3%

15.8%

13.3%

13.7%

20.5%

28.6%

9.1%

23.8%

11.1%

14.5%

13.9%

ALL BUSINESSES

• Large businesses

• Mid-sized businesses

• Small businesses

• Microbusinesses

• Individuals


Source: PYMNTS.com

INTEREST LEVEL

Somewhat interested

Extremely interested

Not at all interested

Slightly interested

Very interested

28 27


Not only are many surveyed market-

place sellers interested in real-time

settlement, but the majority of

businesses, microbusinesses and

individuals in our study would also

be willing to switch marketplaces if it

meant getting paid faster. Sixty per-

cent of all surveyed businesses and

61 percent of surveyed individuals and

microbusinesses are “somewhat” to

“extremely” interested in switching to

marketplaces that offer real-time set-

tlement options.

Large businesses are the most inter-

ested in switching to marketplaces

that offer real-time settlement options:

83 percent of surveyed large busi-

nesses are “somewhat” to “extremely”

interested in switching marketplaces

for real-time settlement. This exceeds

the 50 percent of all surveyed mid-

sized businesses and 54 percent of all

small businesses in our study that are


in doing so.

Individuals are even more interested

than small businesses in switching

marketplaces for faster access to

sales proceeds. Sixty-one percent of

the individuals selling on marketplaces

and 63 percent of the microbusi-

nesses in our survey are “somewhat”

to “extremely” interested in switching

for real-time settlement options. This

suggests that many sellers are inter-

ested in switching marketplaces for

real-time payouts not because they

are paid slowly but because they see

real-time payouts as an improvement

over cash payouts. It also signals an

opportunity to adopt real-time settle-

ment as a method of attracting new

sellers looking for faster, smoother

ways to receive sales proceeds.

Such payout options are particularly

appealing at a time when businesses,

microbusinesses and individuals alike

are migrating to digital commerce

channels.9

61%

63%

INDIVIDUALS

Sixty-one percent of surveyed individuals are “somewhat” to “extremely” interested in switching marketplaces for faster access to sales proceeds.

MICROBUSINESSES

Sixty-three percent of surveyed microbusinesses are “somewhat” to “extremely” interested in switching marketplaces for faster access to sales proceeds.

TABLE 4:

Surveyed sellers’ interest in switching marketplaces for real-time payouts Share that express select levels of interest in switching, by size and type

23.1%

8.3%

35.7%

23.1%

22.8%

21.5%

21.4%

26.9%

41.7%

14.3%

26.9%

19.8%

21.9%

21.2%

25.0%

41.7%

28.6%

15.4%

29.7%

30.4%

30.6%

7.7%

0.0%

7.1%

11.5%

13.3%

9.1%

9.7%

17.3%

8.3%

14.3%

23.1%

14.5%

17.1%

17.1%

ALL BUSINESSES

• Large businesses

• Mid-sized businesses

• Small businesses

• Microbusinesses

• Individuals


Source: PYMNTS.com

INTEREST LEVEL

9 The Great Reopening Brief Series. PYMNTS.com. 2020. https://www.pymnts.com/coronavirus-data-center/. Accessed August 2020.

Somewhat interested



Slightly interested

Very interested

https://www.pymnts.com/coronavirus-data-center/

30 29


REAL-TIME SETTLEMENT DRIVES INCREMENTAL VOLUME FOR MARKETPLACES.

Marketplaces that offer real-time settlement could capture a collective $129 billion to $216 billion per year in sales from U.S. sellers who say they would be willing to switch.

I t is difficult to grasp the scale

of the opportunity marketplaces

face by adopting real-time set-

tlement options without seeing

precise numbers. There are approx-

imately 7.9 million businesses in

the U.S., and 3.5 percent of them

— 285,000 businesses — use market-

places.10 This means that 89 percent,

or 252,000, of the businesses that sell

on these marketplaces are paid by the

marketplaces on which they list. Our

research indicates that 35 percent of


are “very” or “extremely” interested

in switching marketplaces for real-

time settlement and 60 percent of


that are paid via those marketplaces

are at least “somewhat interested”

in switching marketplaces for real-

time settlement This translates into

87,000 businesses that are “very” or

“extremely” interested and 150,000

businesses that are at least “somewhat

interested” in switching marketplaces

for real-time settlement.

We estimate that the average revenue

of these businesses is approximately

$935,000 per year.11 This means that

marketplaces have the potential to

capture a collective $82 billion to $141

billion per year by adopting real-time

settlement options and convincing

the approximately 87,000 to 150,000

marketplace sellers that might be

interested in switching to their plat-

forms for such payouts.

10 All sectors: County business patterns by legal form of organization and employment size class for U.S., states and selected geographies. The Bureau of Labor Statistics. 2020. https://data.census.gov/cedsci/table?q=&g=&d=ANN%20Business%20Patterns%20County%20Business%20Patterns&table=CB1800CB-P&tid=CBP2018.CB1800CBP&hidePreview=true&lastDisplayedRow=18. Accessed August 2020.

11 All sectors: non-employer statistics for the U.S., states, counties, metropolitan areas and combined statistical areas; and by legal form of organization and sales, value of shipments, or revenue size for selected geographies: 2018. The Bureau of Labor Statistics. 2020. https://data.census.gov/cedsci/table?table=N-S1800NONEMP&tid=NONEMP2018.NS1800NONEMP&d=ANN%20Nonemployer%20Statistics&lastDisplayedRow=33&hidePreview=true.html. Accessed August 2020.

https://data.census.gov/cedsci/table?q=&g=&d=ANN%20Business%20Patterns%20County%20Business%20Patterns&table=CB1800CBP&tid=CBP2018.CB1800CBP&hidePreview=true&lastDisplayedRow=18

https://data.census.gov/cedsci/table?q=&g=&d=ANN%20Business%20Patterns%20County%20Business%20Patterns&table=CB1800CBP&tid=CBP2018.CB1800CBP&hidePreview=true&lastDisplayedRow=18

https://data.census.gov/cedsci/table?table=NS1800NONEMP&tid=NONEMP2018.NS1800NONEMP&d=ANN%20Nonemployer%20Statistics&lastDisplayedRow=33&hidePreview=true.html

https://data.census.gov/cedsci/table?table=NS1800NONEMP&tid=NONEMP2018.NS1800NONEMP&d=ANN%20Nonemployer%20Statistics&lastDisplayedRow=33&hidePreview=true.html

32 31


That is just the potential revenue

to be gained from turning business

sellers. There is also the opportunity

to attract microbusinesses inter-

ested in real-time settlement access.

There are approximately 26.4 million

microbusinesses in the U.S., 35 per-

cent — 7.5 million — of which are

paid by the marketplaces they use.

Our survey finds that 53 percent of

these microbusinesses are “very” or

“extremely” interested in switching

marketplaces for real-time settlement

and 78 percent are at least “some-

what interested.” This translates into

1.4 million microbusinesses that are

“very” or “extremely” interested and

2.1 million that are at least “somewhat

interested” in switching marketplaces

for access to real-time settlement

options. We estimate that the average revenue

of these microbusinesses is approxi-

mately $35,500 per year, meaning that

marketplaces have the potential to

capture a collective $50 billion to $73

billion per year by implementing real-

time payouts and convincing these 1.4

million to 2.1 million microbusinesses

to switch to their platforms.

35%MICROBUSINESSES

Thirty-five percent of microbusiness market sellers receive payouts through their marketplaces.

Many surveyed sellers are interested in switching marketplaces for real-time settlement options — not because they are paid slowly,

but because they see real-time payouts as an improvement over cash payouts.

34 33


DEEP DIVE

OUR RESEARCH INDICATES THAT SELLERS THAT ONLY RECEIVE PAYOUTS VIA MARKETPLACES RATHER THAN DIRECTLY FROM BUYERS WAIT LONGER THAN ALL OTHER SELLERS IN OUR STUDY.

They are therefore not only more interested in how easy it is to list on marketplaces but also the most willing to switch for access to digital real-time settlement.

Easy To List, Easy To Leave: The End-To-End

Marketplace Experience

36 35


D igital marketplaces are

expansive, encompassing a

wide variety of sellers look-

ing to make use of their

reach and ease of use, but there is

one portion of marketplace sellers

for which ease of use is of particular

interest: end-to-end sellers.

End-to-end sellers are businesses

and individuals who are paid exclu-

sively through the marketplaces on

which they have listings and never

receive direct payouts from buyers.


of surveyed sellers that are paid only

via marketplaces say they use mar-

ketplaces because they make it easy

to list. This is unimportant to all other

sellers surveyed.

Relying on digital marketplaces to act

as a payment intermediary comes with

a catch, however: These sellers often

wait longer than average to receive

sales proceeds. The end-to-end sell-

ers in our survey wait an average of

3.4 days to get paid, compared to the

sample average of 3.1 days. They never

receive cash payouts and are usually

paid using methods that require one

or more days to fully process their

transactions. Surveyed end-to-end

sellers are most commonly paid via

ACH (39 percent) and debit card (27

percent).


of surveyed end-to-end sellers are


in real-time settlement. The number

of all other sellers who express the

same level of interest is 59 percent.

It is precisely because of the ease with

which they can list their products and

how long they must currently wait to

be paid that end-to-end sellers are

more interested than most in switch-

ing marketplaces if it means getting

paid faster. Our research shows that

67 percent of all surveyed end-to-

end sellers would be “somewhat” to

“extremely” interested in switching

marketplaces for real-time settlement

options — a number that is 60 per-

cent for all other sellers in our survey.

This strongly suggests that end-to-end

sellers find the efficiency of the listing

experience to be important — but not

as important as being paid in real time.

FIGURE 8:

Surveyed sellers’ interest in switching to marketplaces that offer real-time payouts Share expressing various levels of interest in switching for real-time settlement options, by whether they are exclusively paid by marketplaces

8.7%11.4%

22.0%24.4%

21.1%28.0%

17.6%8.4%

30.6%27.8%

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000


Slightly interested

Very interested


Average sample

Sell on marketplaces that pay sellers

Somewhat interested

Source: PYMNTS.com

59%70%OTHER SELLERS

Fifty-nine percent of those who are not end-to-end sellers with the same circumstance are “somewhat” to “extremely” interested in real-time settlement.

END-TO-END SELLERS

Seventy percent of end-to-end sellers who are paid only by marketplaces are “somewhat” to “extremely” interested in real-time settlement.

38


METHODOLOGY

PYMNTS surveyed a census-balanced panel of 5,812

business owners and individuals from across the U.S.

between July 3, 2020, and July 7, 2020, about how they

use digital marketplaces to sell new and used products.

Our analysis focused on businesses generating $10 mil-

lion or less in annual revenue which may or may not have

maintained brick-and-mortar stores, referred to as “Main

Street businesses,” and individuals using marketplaces

in a nonprofessional capacity. Among them, 16.4 percent

were individuals and microbusinesses who sold physical

goods on marketplaces and 3.5 percent were businesses

that did the same. The final sample consisted of 1,049

of respondents who used marketplaces to sell physical

products.

CONCLUSIONT he ease with which marketplaces enable sellers to list and sell their

products and reach out to new customers often make them a valu-

able asset for any business or individual looking to make revenue or

income, yet this ease of use can be a double-edged sword. The fact

that marketplaces make it so easy to sign in and list products means that

sellers can just as easily remove their listings and switch to a new market-

place with minimal effort. Marketplaces are thus left to compete amongst one

another to grab new sellers’ attention and encourage them to stay with services

and features that can help their businesses survive and thrive — particularly

amid the ongoing COVID-19 crisis, during which consumers are feeling pressure

to tighten their belts.

Real-time settlement is one such feature. Our research strongly suggests that

offering real-time settlement options can add value to sellers by allowing them

to immediately access proceeds, stave off cash flow shortages and keep their

businesses afloat. This is true not only for businesses of all sizes across vari-

ous industries, but also for countless individuals looking to supplement their

incomes by selling their hand-me-downs, antiques and other used items. Real-

time settlement options not only present a solution to the current cash flow

crisis so many U.S. SMBs are facing but they also represent a multibillion-dollar

opportunity for marketplaces willing to adopt them.

40 39


PYMNTS.com is where the best minds and the best content meet on the web to learn about “What’s Next” in payments and commerce. Our interactive platform is reinventing the way in which companies in payments share relevant information about the initiatives that shape the future of this dynamic sector and make news. Our data and analytics team includes economists, data scientists and indus-try analysts who work with companies to measure and quantify the innovation that is at the cutting edge of this new world.

Visa Inc. (NYSE:V) is a global payments technology company that con-nects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. The company operates one of the world’s most advanced processing networks — VisaNet — that is capable of handling more than 65,000 transaction messages a second, with fraud protec-tion for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead with prepaid or pay later with credit products. For more infor-mation, visit usa.visa.com/about-visa, visacorporate.tumblr.com and @VisaNews.

The Marketplaces As Retail’s New Front Door: What Sellers Need To Thrive In This New Digital World may be updated periodically. While reasonable efforts are made to keep the content accurate and up to date, PYMNTS.COM MAKES NO REPRESENTATIONS OR WAR-RANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE CORRECTNESS, ACCURACY, COMPLETENESS, ADEQUACY, OR RELIABILITY OF OR THE USE OF OR RESULTS THAT MAY BE GENERATED FROM THE USE OF THE INFORMATION OR THAT THE CONTENT WILL SATISFY YOUR REQUIREMENTS OR EXPECTATIONS. THE CONTENT IS PROVIDED “AS IS” AND ON AN “AS AVAILABLE” BASIS. YOU EXPRESSLY AGREE THAT YOUR USE OF THE CONTENT IS AT YOUR SOLE RISK. PYMNTS.COM SHALL HAVE NO LIABILITY FOR ANY INTERRUPTIONS IN THE CON-TENT THAT IS PROVIDED AND DISCLAIMS ALL WARRANTIES WITH REGARD TO THE CONTENT, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICU-LAR PURPOSE, AND NON-INFRINGEMENT AND TITLE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF CERTAIN WARRANTIES, AND, IN SUCH CASES, THE STATED EXCLUSIONS DO NOT APPLY. PYMNTS.COM RESERVES THE RIGHT AND SHOULD NOT BE LIABLE SHOULD IT EXERCISE ITS RIGHT TO MODIFY, INTERRUPT, OR DISCONTINUE THE AVAILABILITY OF THE CONTENT OR ANY COMPONENT OF IT WITH OR WITHOUT NOTICE.

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